The move is a blow to Japan’s SoftBank, which backed OneConnect through its Vision Fund. OneConnect is just one of several Shenzhen-based Ping An Insurance businesses backed by SoftBank. OneConnect provides technology solutions that help increase revenue and manage risks for small and mid-size financial institutions (FIs) in China.
OneConnect said it was cutting the share sale’s size as well as the targeted price range. A stock exchange filing on Thursday (Dec. 12) indicated that the company was looking to raise $299 million at a valuation of $3.6 billion. The original target was $504 million.
The company is expecting to sell 26 million shares for $9 to $10 each, instead of the originally planned 36 million for $12 to $14, according to the filing.
OneConnect raised $650 million at a $7.5 billion valuation last year, according to filings by PingAn. Its public listing was initially expected to happen in Hong Kong.
“The willingness of shareholders . . . to suffer the humiliation of a massive down round is a red flag,” Arun George, an analyst at Global Equity Research, said in a report on the research platform Smartkarma. “The quick succession of the valuation cuts suggests that OneConnect has likely deep underlying issues.”
The company saw a net loss of $147 million on $218 million in revenue during the nine months that ended Sept. 30. This was in comparison to an $82 million net loss on revenue of $128 million for the same period in 2018, according to reports.
The company has a $650 million Series A financing round under its belt, which valued the company at $7.4 billion.
SoftBank’s Founder and CEO Masayoshi Son is pushing forward with Vision Fund 2, which was announced in July at $108 billion, but the reception by investors has been weak. The fund’s sole major commitment on the table is SoftBank’s $38 billion pledge.